The Crash, and Salvation

[HHAYD]

OOC: Continuation of [url="http://forums.cybernations.net/index.php?showtopic=103434"]Conspiracy of Fools[/url]

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IC:


Over the span of a few months, EnFu became defunct, and SERC was not only investigating EnFu and its employees, but at least three dozens of other companies as well...

And every single investigation turned up strong evidences indicating that the suspected companies, like EnFu, were cooking their books. The Legislative and President Natas passed a bill that increased SERC's budget by ten times and allowed it to temporarily recruit more investigators from other government departments until all of the investigations were completed.

Ever since the civil war, many of Midwest Republic's businesses replaced their illegal acts of corrupting the government with illegal acts of scamming their investors and banks, and the backlash was fatal.

As the results rolled out of the SERC and gobbled up by the media, the stock market and the overall economy came crashing down. Many of the companies that were under investigation faced rapidly declining stock prices and capital sources. Banks and investors shut their wallets closed and demanded their money. The debtors, many of them innocent, were unable to pay their loans and faltered. Unemployment rate shot up as such businesses collapsed left and right.

The banks themselves weren't safe from the crash as well. Many of them spent too much of their budget on investments, investments that turned bad. When the news of the stock market crash occurred, a small bank run occurred in Chicago. The first bank to become defunct was the Chicago Savings and Credit Bank. When the news of CSCB collapsing reached the local residents, more bank runs, and more bank collapses occurred. A lethal chain reaction started, and it didn't take long for it to spread throughout the country.

Midwest Republic government was unhelpful. It lacked the capital resources to assist the failing businesses and the Legislative, as well as President Natas, were unwilling to put the budget in a deficit. Actually, they couldn't in the first place since none of the banks in Midwest Republic were willing to loan large amount of money. The Legislative and President Natas passed a bill to reduce income tax rate by 1%, but that was it.

Edited August 7, 2011 by HHAYD

[Lynneth]

Two corporations were barely affected negatively by the crashing markets.
Xanatos Enterprises and TriOptimum, both always working with a certain 'code of conduct', always properly reporting their profits or losses, each worth billions in their home country of Ceylon and bringing in large amounts of money.
Even though most of these profits were currently being 'appropriated' by Sostra Holdings and their megaproject, what was earned in the Midwest Republic could stay there for expansion and investing. It was thus that Xanatos attempted to buy practically every channel and internet provider that could be bought, while TriOptimum was trying to negotiate for any significant power plant they could get their hands on. The continued instability in certain markets of the Republic would likely make this easier.

Vanguard and a few others such as the [i]Concordance Extraction Corporation[/i] (resource extraction, construction) and [i]Code2[/i] (cars and other land transportation) moved with reduced, but still considerable reserves to take advantage of the situation, alerted to it by friends in XE.
Even with more than 70% of their profits going to Sostra, most probably had enough reserves to buy their way to several percent of their respective markets.

[HHAYD]

[quote name='Lynneth' timestamp='1312741025' post='2774246']
Two corporations were barely affected negatively by the crashing markets.
Xanatos Enterprises and TriOptimum, both always working with a certain 'code of conduct', always properly reporting their profits or losses, each worth billions in their home country of Ceylon and bringing in large amounts of money.
Even though most of these profits were currently being 'appropriated' by Sostra Holdings and their megaproject, what was earned in the Midwest Republic could stay there for expansion and investing. It was thus that Xanatos attempted to buy practically every channel and internet provider that could be bought, while TriOptimum was trying to negotiate for any significant power plant they could get their hands on. The continued instability in certain markets of the Republic would likely make this easier.
[/quote]
Federal Communication Agency would attempt to limit XE to only companies that are nearing bankruptcy. It did not want an another monopoly.

The Department of Energy was even harsher on allowing purchases of failing companies. However, the DoE allowed TriOptimum to purchase EnFu's former assets from the banks that are holding onto them, including EnFu's incomplete thorium power plant.


It would only take a few months for the economy to hit rock bottom. Such situation would force FCA, DoE and the rest of the government to change their mind on allowing the mass purchases of companies.

Edited August 7, 2011 by HHAYD

[Lynneth]

Naturally, XE and TriOptimum would adhere to limits and restrictions given to them, still doing whatever they could through legal means to expand as much as possible and aid other Ceylon corporations to gain a foothold in the failing economy of the Midwest Republic.
Once rock-bottom was hit, they began to strike, having prepared with small-time purchases beforehand. It was, in a sense, an invasion of sorts, corporations taking advantage of a relatively unregulated, and failing, market capitalist economy.
Significant gains were almost in their grasp.

[HHAYD]

Dainel Wer, Director of Department of Economics: "Sri Lankan corporations are hunting failing corporations and buying them up. We can only hold off the wolves for so long."

President Natas: "We don't have the money to bail enough of them out to reverse the economic decline and the Legislative would rather resign en-mass than to put the budget in a deficit. In fact, I contacted all of the banks and none of them are willing to loan the amount of money needed."

Dainel Wer: "And what are we going to do when they setup monopolies? They have insane amount of money and can fight any anti-monopoly actions for years, even decades."

President Natas: "Our local corporations brought themselves upon this. They knew we did not support [i]"Too Big to Fail"[/i] policy, and went ahead and destroyed themselves."

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Four months later:


The economy continued to decline, unemployment rate was over 10%, almost all of the banks were defunct or in danger of failing, and the general public was enraged. They demanded immediate assistance or will vote the "incompetent" politicians out of office.

Meanwhile, Sri Lankan corporations found it easier to purchase more and more failing companies. The government was putting up less fight gradually. The Department of Energy, ironically, was the first one to completely stop opposing Sri Lankan corporations from buying up energy-related infrastructure.

Edited August 8, 2011 by HHAYD

[Lynneth]

Despite beginning to achieve a monopoly or quasi-monopoly in some sectors - especially with TriOptimum soon servicing almost 90% of all households and owning a majority of the nation's power plants - they continued to behave as before. Ceylon corporations reported their profits properly, set fair prices for their products to encourage small, local stores a little and treated their employees fairly.
With all the idiocy that had been done by many of the Midwest Republic's corporations, the 'invaders' from Ceylon behaved like Gentlemen, working to make [i]their[/i] standards the modus operandi of all their competitors.

This was underlined by TriOptimum closing several allegedly safe powerplants, which had turned out to lack most mandatory safety and health standards, not to mention those used in Ceylon.
What the government couldn't do, the foreign investors tried to enforce without laws, attempting to change and reform the behaviour of local companies. The duty of a corporation in Ceylon was not to bring its investors profit at all cost, but to offer its customers good service, its employees a wage with which they could more than barely survive, and their owners the knowledge that they were contributing to a better society, beyond just making money. Pseudo-socialist thoughts had infiltrated the economy long ago.

[HHAYD]

Meeting between still-operational local corporations' executives and board of directors:


1: "Four months, that's all it took for them to smash in and dominate the entire market."

2: "If we only helped Digital Pipeline and Midwest Republic Fuel and Energy Corporation, they wouldn't have gained a footing."

3: "Wouldn't have mattered, if they have the capital resource to buy up most of the corporations, then stopping them before the civil war would've only delayed them by at most a few months."

1: "Any suggestions on how to counter them?"

4: "The usual, get our gloves dirty."

2: "Taking control of the government, that didn't work and ended up helping them. Lying about our finances, that also helped them. Both actions' consequences !@#$%*-slapped us in the face."

5: "We made ourselves too obvious when we used the government's powers, and EnFu took their book cooking way too far."

3: "Any words from our friends in the government?"

5: "They're unwilling to fight the monopolies. The voters were raging and they didn't have the money to bail us out. Now with the economy recovering, booting Ceylonian corporations off their high chair is even harder. They can simply pull the [i]"We saved the economy, why listen to the idiots who wreaked it?"[/i] card."

6: "One weakness though, they play fair. If we play a little bit dirtier without attracting the government's or public's attention, we can hamper their growth and at least delay their total dominance of Midwest Republic."

1: "And how do we avoid detection?"

6: "Simple, we have to..."

Edited August 9, 2011 by HHAYD

[HHAYD]

Many of EnFu's employees were sentenced to harsh terms. They would have to pay a total of $10 billion to the affected banks and investors and serve on average 10 years in prison. Dan Abut received the harshest term, 30 years in prison and $600 million worth of fines.

Less than a dozen of other investigated businesses received indictments as the courts were already overloaded.



For the local corporations that weren't under investigation, they would proceed to break some laws here and there regarding safety, labor customer rights, and environmental regulation. It would take three slaps to the faces for them to understand that getting your gloves dirty won't pay off in the long run.